The recent crash in prices has given crypto bears a voice to make the case that digital tokens such as Bitcoin and Ether are not real safe havens like gold but rather risky speculative assets like casino chips.
Cryptocurrencies had a rollercoaster ride this month with the two main digital currencies, Bitcoin and Ether, falling as much as 30 percent and 45 percent respectively, before paring losses after two of their biggest backers – Tesla’s Elon Musk and Ark Invest’s Cathie Wood – affirmed their support.
The triggers for the $1 trillion-plus shakeout of the crypto markets included China’s move to ban financial and payment institutions from providing cryptocurrency services and Musk’s announcement that Tesla would not accept Bitcoin as a form of payment.
Cryptocurrency investors have long argued that Bitcoin holds the same safe-haven value as gold, which usually retains its value as the rest of the assets burn up, making it a reliable fallback in times of crisis.
But the “digital gold” status came into question last week when Bitcoin sputtered and had its worst weekly performance of the year.
Peter Schiff, chief economist and global strategist at Euro Pacific Capital (Europac.com), tweeted that Bitcoin’s 30-percent slide had “settled the debate” of whether it’s a safe haven or not.
“Today should finally settle the debate. Bitcoin is not a safe-haven, inflation hedge, or store of value asset similar to gold. It’s a highly speculative digital token that trades with other high-risk assets. That’s why it’s tanking today with stocks and not rising with gold,” Schiff wrote.
Some bears went as far as saying that the currency tag attached to crypto was erroneous and should be stripped off since they were just “casino tokens”.
“Cyrptos should NOT be called cryptocurrencies because they are NOT currencies – they are casino tokens. Super high beta, highly risky speculations. Trade ’em if you want, just don’t call them currencies,” Puru Saxena (@saxena-puru tweeted.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?